Back in 1981, Jim Lark wanted to let his customers know about
the special "themed" dinners he and his wife, Mary, would
be serving monthly at their exclusive restaurant, The Lark, in West
Bloomfield, Michigan. He designed a newsletter to present each
month's five-course gourmet dinner menu. The bulletin also
offers tidbits of information about the couple's travels to
Africa (and their chef's European trips) to search out new
French dishes to prepare back home.

The friendly communiqué, which customers receive by filling
out a patron card found at their table, did the trick. "The
newsletter has filled reservations for our monthly themed
dinners," Lark explains. In addition, the newsletter, also
called "The Lark" and mailed to 1,140 customers, gives
Lark an important link with his customers. "It creates a
bond," he says. "I write it myself and treat it like a
personal letter to a friend."

Lark, whose only other form of advertising is an occasional
advertisement in a charity publication, credits his 16-year-old
newsletter with helping to build a very loyal clientele.
"About 85 percent of our business is repeat business,"
says the restaurateur. "I know the newsletter is working.
There isn't a night that goes by that a patron doesn't tell
me how much he enjoys reading it."

Customer newsletters are one of many proven methods
entrepreneurs can use to keep in touch with existing customers and
generate return business. Why cultivate a relationship with a
customer once the sale is made? Studies show that it's four
times more expensive and time-consuming to drum up new business
than it is to nurture the customers you have. Besides, satisfied
and happy customers do more than make repeat purchases: They're
likely to tell others about your business, thereby generating
potential revenues for you without any work or investment on your
part. Here are six other sure-fire strategies you can use to keep
your customers coming back for more:

1. Try punch cards. At the Brooklyn Coin Laundry in
Brooklyn, Michigan, Jim Reiff's customers are given "Wash
Cards" that contain 10 spaces on the front and a place for the
customer's name and address on the back. Every time a customer
uses the laundry facility, an attendant stamps his card. After 10
stamps, the customer receives a free wash and becomes eligible for
a monthly drawing. The prize: five free washes.

The punch cards, Reiff believes, help generate repeat business.
"People like to get something for nothing," says Reiff,
who displays pictures of his monthly winners on a bulletin board at
his laundry. "It doesn't cost me much to offer the
program, just some free washes. And with so much competition in
this business, I want to keep my customers coming here, rather than
going to a competitor."

Punch cards are a natural promotion for a variety of retail and
service businesses, including video-rental stores, car washes,
shoe-repair stores, bagel shops and coffeehouses. "They're
a good way to make your business different from your
competitors'," Reiff adds. "For us, the cards are
more effective than any other advertising we do."

2. Offer something special. If your business isn't
set up to use a punch-card promotion, consider other customer
freebies. If you sell office supplies, give away a new pen with a
sizeable purchase. If you're in the cosmetics business, offer
customers a free half-hour beauty consultation when they buy $50
worth of skin-care products. If you run a restaurant, give away a
glass of wine or bottle of mineral water when diners place an order
for a new menu item.

3. Stay in touch. Besides a newsletter, there are several
ways to maintain contact with your customers. Send a written
thank-you note expressing appreciation for their business. Remember
them with a holiday or birthday card. Depending on your type of
business, you might call key customers to see how they're
doing. You don't need to sell anything; the next time they need
your product or service, they'll remember you.

If you sell retail, why not invite past and present customers to
a special pre-sale event? It's a great way to give them an
exclusive, first-hand look at sale merchandise and, at the same
time, say "thank you" for their patronage. That's
what Noel Charonet, owner of Sierra Nordic, a ski-equipment store
near Lake Tahoe, California, does at his annual Labor Day weekend
cross-country-ski sale. Who gets first notice of his one-time
discounted prices on new cross-country skis and equipment? The
regular customers on his mailing list.

4. Nurture your referrals. Referrals are probably the
most powerful way to develop a solid client base for your small
business. "Referred customers require less selling time and
are more loyal than other customers," says Jill Griffin,
author of Customer Loyalty: How to Earn It, How to Keep It
(Jossey-Bass, $23, 800-956-7739). "They come ready to buy
because, in effect, they have already been sold."

The best way to generate referrals, Griffin says, is to give
your customers "something to talk about" so they'll
have reason to tell their friends and business associates about
your business. That "something" could be a product
guarantee, a service warranty, a liberal replacement policy, highly
trained and knowledgeable employees, or honest and competent
service with a smile.

5. Ask why they left. Before you go after new prospects
to replace lost customers, find out why a customer stopped doing
business with you. Contacting them might not win the person back,
but you could gain important insights into how you can improve your
customer service, billing procedures, or the way your receptionist
answers the phone and takes messages.

6. Give top-notch customer service. Cliff Miller and
Karen Carson operate Boulevard Coffee Roasting Co. in Carmichael,
California, a $1 million-a-year-plus coffeehouse and roasting
operation. Boulevard Coffee is well-known for its high brewing
standards and ambient coffeehouse setting, with its cherrywood
display counters and antique tables and chairs. Still, it's how
employees relate to them that keeps the customers returning time
and again.

The staff greets customers by name, recalls their favorite
coffee orders, and explains the best ways to brew a diverse
selection of coffees and teas at home. "The environment here
is easy and comfortable. We want our customers to feel at
home," says Miller. "Besides a good cup of coffee, we
believe excellent customer service will keep our customers coming
back."

Can You Manage?

For years, small-business owners found it hard to compete for
good employees because they couldn't offer them health
insurance. Now, an increasing number of states are establishing
community health-insurance purchasing alliances that make health
insurance more affordable for entrepreneurs.

The basic concept of the purchasing alliance is as follows: By
combining the purchasing power of several small employers, an
alliance can offer small-business owners increased bargaining clout
and better rates. Several states have included the alliance idea in
their health-care reform bills.

The National Association of Insurance Commissioners
(202-624-7790) has developed three legislative models to be used in
the alliance discussion. One of the most successful models, the
Florida system, is based on a regional system governed by regional
boards. In Florida, this entity is called a Community Health
Purchasing Alliance (CHPA).

So far, the state's 11 CHPAs have enrolled more than 40,000
employees and cover nearly 80,000 people, according to Connie
Ruggles, senior management analyst for the Florida Agency for
Health Care Administration (904-922-8447), which helps run the
CHPAs.

Another approach involves a single purchasing alliance for the
entire state. This approach has worked in California through Health
Insurance Plan of California (800-447-2937). The program is
intended for companies with between three and 50 eligible
employees, and now has more than 6,000 businesses participating in
the plan.

The third model encourages private, competing alliances. This
idea has taken off in Colorado, Iowa and Ohio. For example, 11
alliances are registered with the Ohio Department of Insurance
(614-644-2658), according to David Randall, deputy superintendent
for the agency. These alliances provide coverage for companies that
employ up to 150 people and, to be certified, must cover at least
2,500 people. In many cases, the alliances are being run by local
chambers of commerce.

Contact your state's department of insurance or state health
department to see if they've organized any health-insurance
purchasing alliances for small businesses. --David Volz

Money Matters

Tired of digging through sofa cushions looking for loose change
to finance your newest project or idea? The Small Business
Financial Resource Guide may be just the tool you've been
looking for. Sponsored by MasterCard International, the 150-page
guide can help you find the much-needed capital to start up your
new business or expand the one you've already started. Five
sections of helpful information are provided for your perusal,
geared toward gaining different types of aid offered by the private
sector and the state and federal governments.

The guide provides specific contact information for such
resources as the Minority Business Development Agency, the Small
Business Innovation Research Program, as well as a brief
description of some of the Small Business Administration's
(SBA) loan programs, including Basic 7(a) Loans, MicroLoans, and
the Caplines Loan Program. For those intimidated by the thought of
directly approaching the federal government for financial
assistance, the guide also offers an entire chapter's worth of
local resources--including the SBA's district office's
phone numbers and addresses--for each of the 50 states.

Another helpful feature for the small-business owner is the
glossary of terms at the end of the guide, which lists important
terms for gaining the financial support needed to get your business
off the ground. Are you familiar with the difference between a
direct loan and a guaranteed loan? Knowing your financial
terminology can be critical when trying to make heads or tails of
the fine print of loan and credit applications and other financial
paperwork.

The Small Business Financial Resource Guide is a free
publication. For ordering information, call (800) 821-6176.
--Matt Squires

Just For You

When Anchorage, Alaska, watercolor artist Teresa Ascone went to
see Credit Union One president and CEO Leslie Ellis, she didn't
ask for a loan. She sought advice on tempering her right-brain
creativity with left-brain business sense. Their meeting of the
minds launched a profitable paint-palette manufacturing business
and a satisfying mentor/protégé relationship.

A mentor can be a valuable, often untapped resource for
entrepreneurs starting or expanding a business. For Ascone, a
business mentor gave her new ideas and renewed confidence.
"I'm an artist. I feel at sea when it comes to
business," says Ascone. "Leslie helped me develop a plan
of attack."

Ascone designed a paint palette that was selling well in Alaska.
She was ready to expand into the "Lower 48," but
didn't know how. Choosing a mentor who was savvy in business
and finance was the solution.

Ascone found Ellis through the Women's Network of
Entrepreneurial Training, a federal program offered by the Small
Business Administration's (SBA) Anchorage District Office. The
program pairs protégés--women who have been in business
for at least one year--with successful businesspeople who are
willing to volunteer their time as mentors. Within months of their
first meeting, Ascone's sales quadrupled and expanded worldwide
as her palette was picked up by art-supply distributors outside
Alaska.

Choosing a mentor is an important investment in time and energy.
If you think the guidance of a mentor might help you and your small
business, here are five important characteristics to look for:

1. Successful. You'll want someone who has been in a
successful business for at least five years--enough time to survive
some economic downturns.

2. Committed. Choose someone who's willing to meet
with you regularly, assign you business "homework," and
hold you accountable for those tasks.

3. Active in the business community. Someone who's
involved in the business community will be able to refer you to
other resources and help you develop a business network.

4. Someone who's different. Your weaknesses should be
your mentor's strengths. Choose someone in a field other than
your own; you want compatibility, not competition. The only thing
your mentor should gain from the mentorship is the personal
satisfaction of helping you succeed.

5. A cheerleader. A mentor should be your personal
cheering section by acknowledging your successes and encouraging
you to challenge yourself.

Your local SBA office may have networking programs established
to help you identify potential mentors. To find such a program in
your area, call the SBA's national business resource line at
(800) U-ASK-SBA or (800) 827-5722. --Janet Asaro

For Your Information

Want to know more about how to keep your customers coming back?
Try these helpful resources:

Turning Lost Customers Into Gold, by Joan Cannie
(AMACOM, $19.95, 800-262-9699). Shows how to know you're losing
customers and how to regain their loyalty.